close
close

first Drop

Com TW NOw News 2024

    • How Spirit Airlines’ Bankruptcy Could Affect Your Travel
    news

    How Spirit Airlines’ Bankruptcy Could Affect Your Travel

    Vaseline Posted on

    play

    • Spirit Airlines has filed for bankruptcy protection, but most flights should continue as planned for now.
    • Passengers with existing Spirit reservations should watch for notifications about possible changes to their itineraries.
    • The fate of Spirit’s planes depends on whether they are owned or leased, and whether the airline chooses to sell them during bankruptcy proceedings.

    Spirit Airlines officially filed for bankruptcy protection on Monday after the pioneer of no-frills travel in the US struggled with a long string of quarterly losses, failed merger attempts and looming debt.

    Spirit’s problems intensified after the collapse of its planned $3.8 billion merger with JetBlue Airways in January and the impact of problems with RTX and Pratt & Whitney turbofan engines that grounded many of its planes.

    The airline listed its estimated assets and liabilities at between $1 billion and $10 billion each, according to a lawsuit filed Monday.

    Spirit has entered into an agreement with its bondholders that is expected to reduce overall debt and provide greater financial flexibility.

    The airline has received a commitment for a $350 million equity investment from existing bondholders as part of its prearranged Chapter 11 bankruptcy protection.

    Existing bondholders will also provide $300 million in debtor-in-possession (DIP) financing, which, together with available cash, is expected to support the airline through the Chapter 11 process.

    Spirit expects to be delisted from the New York Stock Exchange in the near future.

    The airline said it expects to continue its flight operations during the procedure and customers will be able to book and fly without interruption. Passengers shouldn’t worry too much about their travel plans or frequent flyer miles.

    “In the short term, it’s just going to be smaller,” Robert W. Mann Jr., a former airline executive officer and current president of RW Mann and Co., an independent aviation consulting firm, told USA TODAY. “If you have already received notice that your flight has been canceled or had to be rebooked, you have already received that notice.”

    Spirit previously announced pilot furloughs and capacity cuts to address ongoing financial issues, as well as well-documented engine problems that have grounded many Airbus A320s at airlines. Spirit only flies A320 family aircraft, so it has been hit hard by these errors and has already limited capacity as a result.

    Here’s what passengers need to know if Spirit goes bankrupt.

    What happens to flights already booked?

    Most, if not all, flights should go as planned in the short term.

    Mann said Thanksgiving travel is especially unlikely to be affected, but it is possible there will be schedule changes and cancellations later in the winter.

    “It’s very possible that after 45 days, which is kind of the end of the year, we’ll have some other changes,” Mann said.

    Travelers with existing Spirit reservations should watch for notifications of any changes to their Spirit itinerary as their departure date approaches.

    “Their best notice is the notice they get from the carrier, such as time changes or rebookings or inability to rebook, cancellations. Then, of course, they’re subject to the new (Department of Transportation) rules about how travelers should be treated, so understanding that is probably important,” Mann said.

    The Department of Transportation recently issued guidelines requiring airlines to provide passengers with full refunds if their flight is canceled for any reason or delayed more than three hours on a domestic route or six hours on an international route. Travelers are only eligible for a refund if they choose not to travel on the delayed flight or on an alternate itinerary offered by the airline.

    Can I transfer my Spirit loyalty miles/points to another airline?

    Generally, airline loyalty points or miles are not transferable, but Mann said frequent flyer programs are valuable assets that often survive bankruptcies.

    “That’s a plus, at least from the standpoint of the people who might acquire them. You also build a customer base,” he said. “That could even be a source of funding in the future.”

    It is also possible that Spirit will emerge from bankruptcy through a merger. Many industry observers expect the incoming Trump administration to be friendlier to airlines joining forces than the Biden administration. Under Biden, a proposed merger between Spirit and JetBlue was rejected, and Frontier Airlines also recently withdrew from a bid to combine with its yellow ultra-low-cost rival, as first reported by The Wall Street Journal. These deals could be revived, or another potential buyer could step in in a different regulatory environment.

    If Spirit merges with another airline, chances are the frequent flyer program will be part of the package and combined with that of the other airline.

    Who keeps Spirit’s planes?

    It depends.

    Spirit does not yet possess all its domains. For the part of the fleet that is leased, the lessor retains ownership and is free to transfer it back to Spirit or another airline, depending on the offers on the table.

    Aircraft that Spirit does own can be sold to raise cash during bankruptcy, but the airline may choose to sell other assets, such as gates and airport slots, instead if managers believe the planes are likely to generate revenue generate by staying employed.

    Contributions: Reuters

    Zach Wichter is a travel reporter for USA TODAY based in New York. You can reach him at [email protected].

    Vaseline
    View all posts

    You Might Also Like